Short Plan Year

[12AX7]

I'm sure this topic has been covered before, but I can't seem to find search results. Anyway, if a plan is merged and the final plan year is less than 7 months, is the audit still required? CFR 2520.104-50 allows a merged plan to be a reason for a short plan year. However, this section discusses the deferral of the report, but perhaps not the elimination of the report. Would the surviving plan have the responsibility of audit after the merger? I'm a little confused on this issue. Thanks.

[movedon]

Yes, I think the audit is still required. Generally when there is a short Plan Year of less than seven months, the audit for the short year can be filed along with the 5500 and audit for either the full Plan Year preceeding the short year or the full Plan Year following the short Plan Year. There's a box to check on the Schedule H for the short-year 5500 indicating you're using this exception. In the case of a short Plan Year created by a merger, there's not a full Plan Year after the short Plan Year (at least not for the non-surviving Plan) to file the short-year audit with, so I don't think the exception buys you any time for the short-year audit. Some folks would argue that you could defer the short-year audit and file it with the next full-year 5500 and audit for the surviving Plan (as you suggest). I think that's a less conservative opinion, although the rules seem sufficiently vague that you could make a case.